False Claims Act Hospice Fraud Case Poised for Settlement

A False Claims Act lawsuit alleging tens of millions of dollars in hospice fraud is nearing a settlement agreement – according to recently filed Court documents.  The case, United States of America, et al., v. Creekside Hospice II, LLC pending in United States District Court for the District of Nevada, was first filed by whistleblower Joanne Cretney-Tsosie– a clinical manager at Creekside Hospice II.  Ms Cretney Tsosie filed a qui tam lawsuit under seal in 2012.  Then, Veneta Lepera – another whistleblower and former clinical manager for Creekside – also filed a qui tam lawsuit under seal in 2013.  The term “under seal” refers to a unique phase in False Claims Act cases whereby the existence and facts of the complaint filed by the whistleblower are not known to anyone except government investigators and the District Court where the case is filed.  This means that while the government is investigating the case, the defendant will not know that a whistleblower has filed a case or the whistleblower’s identity.

Under the False Claims Act, the United States may elect to intervene in a case and take over primary responsibility for prosecuting the case.  The United States intervened in this case in December 2014.  At that time the government filed its own complaint in intervention and the two whistleblower cases were consolidated into the current case.

 Medicare/Medicaid Hospice Fraud

Each of these cases alleged that Creekside committed Medicare fraud by billing for hospice services provided to patients that were clinically ineligible to receive hospice services.  Patients are only eligible for Medicare and Medicaid hospice services if they are terminally ill, which is defined as two physicians certifying that the patient has a life expectancy of six months or less if their disease runs its normal course.  The United States’ complaint in intervention alleges that Creekside and other defendants knowingly submitted false claims for hospice care for patients who were not actually terminally ill and directed staff to enroll patients in hospice care regardless of the patients’ eligibility.  Commenting on the case Acting Assistant Attorney General Joyce Branda said: “Too often, however, companies abuse this critical service by using aggressive marketing tactics to pressure patients who do not need, and may be ill-served, by these services in order to get higher reimbursements from the government.”

The government further alleges that Creekside management instructed employees to alter medical records to make it appear that hospice doctors visited patients, when in fact they had not.  Other aspects of the scheme include allegations that management discouraged staff from permitting patients to revoke their decisions to accept hospice benefits and discouraged staff from documenting known improvements in a patient’s health, called “chart killers” by the hospice.  The government also alleges defendants knowingly submitted inflated claims to Medicare for services performed by the hospice medical director.

According to Chicago lawyer Juliet Berger-White, who represents Relator Cretney-Tsosie, Creekside received more than $70 million in payments from Medicare and Medicaid from April 2010 through March 2013.  Further, the government contends that as a result of its hospice fraud, Creekside entities misspent tens of millions of taxpayer dollars from Medicare and Medicaid programs.

Case Nears Settlement

Recent progress in the case has centered around settlement discussions.  On June 2, 2016, the parties filed a Joint Unopposed Motion to Stay Action for Ninety Days Pending Settlement Discussions.  This Unopposed Motion has been extended on multiple occasions to allow for more time for settlement talks.  In the latest motion to extend the stay, the Parties state that “the United States and Creekside have reached an agreement in principle pertaining to the settlement of the action.” The Motion also states “Relator Cretney-Tsosie and Defendants are currently negotiating statutory attorneys’ fees and costs pursuant to 31 U.S.C. § 3730(d).”  This provision allows successful Relators to recover their attorney fees and costs incurred in pursuing the action.  After years of litigation, it is encouraging that the case is potentially nearing a settlement agreement and funds misappropriated from the taxpayers will be returned.

Frohsin Barger & Walthall and the False Claims Act community will be closely watching this case as a settlement agreement will likely be disclosed in the coming weeks or months.

To learn more about hospice fraud, click here.